Created on Thursday, 07 March 2013
Written by JULIE CARR SMYTH,Associated Press

COLUMBUS, Ohio (AP) — Ohio's Republican state treasurer is again bucking Gov. John Kasich on a major policy issue in the state budget.

At a meeting Thursday of the 3,200-member Ohio Oil and Gas Association, Ohio Treasurer Josh Mandel said he opposes the Republican governor's plan to raise the tax oil and gas drillers pay on resources drawn from the earth. Mandel said the tax increase could discourage Ohio oil and gas investment at a critical time and the money should be plowed back into the burgeoning industry.

"Now is not the time for government to kill the golden goose and scare away the capital that could lead to a long-term recovery in our state," Mandel said, labeling the tax plan wealth redistribution.

Mandel said he wrote an op-ed column in the Wall Street Journal during his unsuccessful bid for U.S. Senate last year that highlighted the disconnect between Washington and Ohio's interests. He said federal officials have displayed a "willingness to side with fringe environmentalists over the interests of some of the most economically depressed regions of Ohio."

He did not mention the governor during his speech, which drew several bursts of applause, yet it marked the second time in a month that Mandel has publically opposed Kasich on a proposal that divides members of the GOP.

In February, Mandel sent a letter to state legislators urging them to reject Kasich's proposal to expand Medicaid under the federal health care law. He argued the plan's long-term financial harm outweighed its short-term benefits.

Both the tax increase and the Medicaid expansion are part of Kasich's $63.2 billion state operating budget, which lays out state spending for the two years beginning July 1.

Kasich has incorporated the severance tax increase into a significant tax policy overhaul that includes cuts in income tax, small-business and sales tax rates, while expanding the sales tax to a host of new services. He has said the well-funded industry is unjustified in its concern, given Ohio's tax rate is among the lowest in the nation.

A spokesman did not immediately return an email seeking comment Thursday.

Mandel anticipated a fight over the tax plan and encouraged industry representatives to passionately lobby their legislators against the increase.

"Consider me a soldier in your cause," the two-tour Iraq war veteran said.

The brewing tax battle has taken a toll on the relationship between the association and the adminstration. For the first time in its history, the event did not feature representatives of the state agencies that oversee oil and gas drilling, including the Ohio Department of Natural Resources and the Ohio Environmental Protection Agency.